JOET - The More Things Stay The Same

2024-05-11 02:00:00 ET

Summary

• One of the cardinal tenets of investment management is that nothing stays the same forever.
• Mean reversion will at some point bring the high-flyers down to earth, and when that happens, you want to have other positions in your portfolio that offer some cushion.
• The global economy has changed in many ways over the past thirty years. Take US large cap growth, the runaway outperformer over this time.

There is a genuinely strange phenomenon that has taken place in the global equity market over what is by now a very long time period. Consider the chart below. It shows the relative performance of five equity asset classes – US large-cap growth, US large cap value, US small-cap growth, non-US developed and non-US emerging markets – over four different time periods....

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